Agency, Benevolence and Justice

We test for social norms regarding how Agents should select between risky prospects for Principals, including norms consistent with observations by Adam Smith. We elicit norms from subjects serving as ``impartial spectator[s] about the choice of risky prospects selected by the Agents. We find strong evidence for the existence of norms, consistent with Smith\u27s observations. Furthermore, we find that Agents are more likely to select more normative options. In contrast, we find that Principals\u27 allocation for bonuses depends on the realization of the risky prospect rather than whether the Agents\u27 choice was consistent with the norm